In Mass., $345,000 to be Repaid for Wrongful Policy Terminations

Massachusetts drivers with clean records who had their policies unfairly terminated by Metropolitan Property and Casualty Insurance Company (Met P&C) will see restitution for having to switch insurers following an investigation by the state attorney general’s office (AGO).

The insurer will pay about $400,000 total resulting from the AGO’s 2010 investigation into 2,600 policies that the insurer refused to renew. The policies belonged to drivers who had clean records for the previous three years. Under the state’s “clean-in-three” rule—which only applied to policies before April 2011—insurers were prohibited from terminating policies of motorists whose records had no traffic violations or accidents in the past three years.

It is the first case of its kind that the AGO has encountered, according to spokeswoman Jillian Fennimore.

About 2,500 policyholders who were non-renewed will receive $310,000 in restitution payments—an average of $124 per policyholder. Those consumers were forced to look for coverage elsewhere and did end up finding policies from other insurers.

Met P&C will also pay $35,000 to 56 policyholders who were terminated and put in the state’s Massachusetts Automobile Insurance Plan (MAIP), bringing the average payment in that group to $625. MAIP is a last-ditch option for motorists unable to get Massachusetts car insurance from willing insurers in the voluntary market. MAIP’s high-risk policies are typically pricier than those that could be found on the voluntary market.

Fennimore said the restitution amounts were generally based on the cost of changing insurers.

Met P&C will also pay the state $50,000 and “has agreed that it will follow CAR rules and Massachusetts statutes and regulations in the future when renewing and non-renewing” auto coverage policies.

Met P&C is a subsidiary of MetLife of New York. The insurer complied with investigators throughout the case and will continue to provide documents to the AGO as evidence they are adhering to state law, according to the AGO.

About Charles Nguyen

Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.